It's Not Your Parents' Economy Anymore
The structure of the global economy is changing rapidly. It can be most notably highlighted by the rapid growth of Uber, but it is much more dramatic than one company. It is being driven by an aging Baby Boomer (BBers) generation and the maturation of Generation X (Gen Xers) and Millennials (M’s).
The youngest BBers (people born between 1945 and 1960) are over 50 and the oldest are already retired. BBers did not grow up with any understanding of a computer and they could only rely on the Dewey Decimal System to find information in a library. The process of learning to a BBer is completely different from that of an M. BBers read physical books and took notes with paper and pencils. Financials were kept on a written ledger and for most, there were no calculators. In fact, all of education and business were solely dependent on being at a physical place that could store all of these books and papers. Dress codes and work hours were created around the need to go to a place to commence one’s work. These basics were not materially different from the Silent Generation (people born between 1920 to 1944), the generation upon which BBers apprenticed. However, Gen Xers not only grew up with personal computers, video games, and MTV, but also witnessed first hand the radical change of tasks being done by people to those same tasks being automated with software. They also witnessed BBers lose a tremendous amount of wealth in the crisis of 2008 and in many cases, have parents that were forced out by advancement of technology.
The M’s have never known a world without a digital gadget. Most have grown up learning and producing work product on a personal computer. While Gen X’ers share learning experiences with both the BBers and the M’s, the M’s have very little in common, as it relates to the process of learning and working, with the BBers. These generational differences are creating a huge change in the global economic structure and what it really means to “work”.
“Six decades into the computer revolution, four decades since the invention of the microprocessor, and two decades into the rise of the modern Internet, all of the technology required to transform industries through software finally works and can be widely delivered at global scale.” Marc Andreessen, WSJ 8/20/11
The number of people who identify as freelancers has risen by 7 million people since 2010. While currently there are 17 million full time freelance workers today, that number becomes 53 million, or 34% of the workforce, when temps, part-time freelancers, moonlighters, contractors and freelance business owners are in included. The industries included are spread across the spectrum, though the majority are in sales and marketing. However, freelancers include engineers, IT, design, manufacturing and writing. Gen Xers make up the majority of freelancers, and even BBers take up more of a percentage of freelancers than the M’s. But, with the maturation of M’s and the retirement of BBers, the freelancer population will increase dramatically in the coming years.
The facts are pretty clear, as internet connectivity speeds improve and as software continues to rapidly automate tasks, more and more people will choose to ditch the corporate office and work for themselves on projects that engage them and allow them to set their own schedule. Further, as new marketplaces evolve, freelancers will be less dependent on their own marketing skills to find projects. Marketplaces like Elance, Freelancer.com, Task Rabbit and oDesk allow a freelancer to find projects and firms in need of freelance services. With 88 million people having access to high speed internet connectivity, there are fewer and fewer barriers to entry for freelancers.
“Entrepreneurs create more jobs than any other sector of the economy, and they are in the vanguard of an evolving 21st Century economy that is shaping America’s new employment landscape — one where brick-and-mortar storefronts are being replaced by online retailers, and freelancers and contractors are the new version of the 9-to-5 office worker. The rise of the digital nomad and the freelance economy is here, and small businesses and the self-employed are leading this movement.” John Arnsmeyer, Founder & CEO, Small Business Majority
The Maker Economy
With the evolution of software and hardware, a new class of worker is emerging. The Maker is the burgeoning class of people who create, design, and manufacture with 3D printers and other hardware. The Maker can use their own creativity and ingenuity to create products with very little cost. Advances in software have made creating such products much simpler and computer aided design software has radically advanced the time and effort required to design a product. An entrepreneur can create, and even fund, its mass production through websites like Indiegogo and Kickstarter without the need for huge marketing, development, and/or production costs.
The maker movement is made up of some 135 million adults in the U.S. They use their skills to craft items such as clothing, baked goods, jewelry, and art; contributing $29 billion to the U.S. economy annually. But this Maker economy goes beyond the U.S. and has taken strong root in the UK and Europe as well as Asia and Africa. Here are some quick facts on the Maker Economy:
- 57% of U.S. adults are Makers = 135 million Americans (Martha Stewart, USA Today Oct, 2013)
- The Maker Movement contributes to the 28M small businesses in the U.S. and these businesses create 2 out of every 3 new jobs in our country (Martha Stewart, USA Today Oct, 2013)
- $29B are pumped into the economy each year from the Maker Movement (Martha Stewart, USA Today Oct, 2013)
- The 3d printing market is projected to be worth $8B by the year 2020 (MarketsandMarkets, Nov 2013)
- The World is expected to crowdfund 5.1 B in 2013 (Forbes, April 2013)
- 48% of large manufacturers plan to return production to U.S. from offshore (The Wall Street Journal, June 2013)
- There are 200+ hackerspaces across the U.S. (New York Times, May 2013)
The 2015 Employee
Today’s leading-edge workers are deliberate about how they spend their days, their evenings and their “time-off”. They realize that their mix of wage work and passion work can and should be a source of personal fulfillment. Sara Howoritz, Fast Company, July 2015
Clearly, the growth of co-working facilities, i.e. Cross Campus, show that there is a strong market for freelancers and makers to find a place to ply their trades. However, as the impact of Gen Xers and M’s continues to be felt, corporate America and institutional landlords are going to have adjust. The success of PacMutual has demonstrated to our team at Rising that if a landlord can meet the needs of the 2015 Employee, both Gen Xers and M’s will not ditch the tradition of having an office environment even though they are not interested in the traditional office experience. As we have worked with our tenants to be more flexible on work hours, allow dogs, create a wider range of healthy food alternatives, and provide a curated experience, we find that the 2015 employee has been very good for the economy.